The folks at the Pragmatic Capitalist have been very busy bees over the vacation. They posted on New Years Eve an exhaustive linkfest of all of the forecasts, outlooks, predictions and investment surveys made by the major Wall street firms and independent research shops and hedge funds.

The Pragmatic Capitalist is the founder and CEO of an investment partnership. Prior to establishing his own business, TPC was a Merrill Lynch Financial Advisor. TPC is a Georgetown University alumnus, growing up in the DC area and now living in Southern California. In addition to regular commentary by TPC the website is a collaborative work from several different Wall Street experts.

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18 Responses to “Guide to 2010 Outlooks”

That’s a lot to review..thanks BR. Hussman’s most recent comment adds some color to his outlook:

“What we do know is that stocks are overvalued even on the basis of normalized earnings, to an extent that exceeds nearly every pre-1995 level except 1929. Intermediate term conditions are strenuously overbought, investors (with advisory sentiment now down to 15.6% bearishness) are clearly overbullish, and interest rate trends are pushing higher. This situation does not always resolve itself into market declines, and indeed, given that market internals remain reasonably firm, we may continue to observe marginal new highs for some amount of time. But the statistical regularity from overvalued, overbought, overbullish, rising yield environments is one of steep, abrupt market losses generally within a period of about 10-12 weeks.”

It is tough to make predictions, especially about the future. – YOGI BERRA

It continues to amaze me to watch the Wall Street Gurus apply scientific and fundamental logic to an illogical game. Not only does this cause traders, who buy into these scenarios, to underestimate risks, it also draws a crowd into the scenario, increasing risk further. As John Train said in his book Dance of the Money Bees, “The herd instinct seems to be the strongest human emotion, one that the race is constantly breeding off as the mavericks are liquidated. Happiness is running with the crowd.”

Please provide some framework for predictions..eg: S&P Target, 10 year rate, Fed Funds rate, Oil, gold…then readers can add some surprises of their own. This will cut down on the chaos, allow easier comparisons and will get better participation IMO.

This looks like great stuff, Barry. Thanks to Pragmatic Capitalist for the permission to share. I’ll bookmark their site as a favorite for being so.. well.. pragmatic.

Unfortunately, all the links I attempted are blocked for me here at the office… Big Brother doesn’t want me educating myself on His dollar. Interesting story: TBP was okay at work when I first discovered it; then, Barry printed some unflattering remarks about my company’s management (he named names), then POOF, TBP was blocked the next day here at the office. Not sure what happened (except the stories died down, as well as the commentary), but now TBP is back to being “safe.” Funny how that works.

Richard Dennis, a commodity trader known as the “Prince of the Pit” once said: “Too many traders – too many people in all walks of life – keep asking, ‘What do you think of this?’ ‘What’s going to happen next?’ They have to get away from that herd mentality.”

Bill Dunn, another commodity trader, said “Why do people think they’re smarter than the market long-term? What gives them that confidence? I guess people feel dumb if they can’t predict what the market is going to do in the short term. They’re too proud to admit they don’t know what to do when they’re wrong. They don’t have the capacity to understand the digits that are scrolling by on the bottom of the television. I don’t. It’s too much noise. That’s why we rely on our system.”

What’s The Difference between Winning and Losing Traders? Smarts and Strategy. The Right System Changes Everything!

Can The Pragmatic Capitalist actually call itself pragmatic and publish a list so large? Certainly the compiled list saves one time in finding the lists themselves but the pragmatism, in terms of usefulness, is arguably diminished by the increase in information and range of opinions. At the end of the reading, which I did not do, one is likely to confirm their own biases anyway.

This list is quite the paradox and microcosm of the information overload that will only compound in this new decade.

More information = bounded rationality = decrease in ability to make prudent decisions = the antithesis of pragmatism.

For entertainment purposes and for the sake of curiosity, however, this list might be interesting. Thanks for publishing it Barry…

I’ll take a shot at a prediction… If you’re ‘trader’ or ‘speculator’ (And Nimble) it’ll be a good year. If you’re a buy and hold type of individual, it will not.
I think Peter Boockvars’ post above ‘The Fed and where stocks go from here’ addresses one of the key issues for the U.S. economy… Does the Fed continue its purchase of MBS?? In light of the Feds ‘Mission Statement’ it obviously will depend upon the unemployment rate, inlflation trends, but probably most importantly stability of the housing market– (looking at it from the Feds perspective I think the unemployment rate remains unacceptabley high). Has the purchase of MBS by the Fed been a Key Factor in helping the economy from both the unemployment situation and the Housing Market perspective– I think maybe it has.
The bond market looks to be pricing in and end to the Feds program with interest rates (and the dollar) moving higher.
If the Fed can justify its purchases of MBS, with the unemployment rate where it is, it may extend the program in some form or another.
In which case the dollar resumes its downtrend and commodity prices, especiallly energy, resume their (inlationary) uptrends– especially in light of the colder than average weather across most of the U.S.
I think some of their decision making will be linked to how the Chinese policy/economy performs (i.e. yuan appreciation/depreciation).
Also, its an election year– which creates more uncertainty for an overbought stock market.
In my view, no matter what the Fed does, we’re going to get that ‘Correction’ in these overly bought stock markets this year — whether it’s due to higher interest rates or whether it’s due to higher food and energy prices…

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About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

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